New JCT 2024 Edition Design and Build Contract

On 17 April 2024, the Joint Contracts Tribunal (JCT) released the 2024 edition of its Design and Build Contract (the JCT 2024 D&B Contract). This is the first major update since 2016.

There is also news of a new form of contract coming to the JCT suite.

What are the key changes?

The latest edition of the JCT 2024 D&B Contract contains several changes from the 2016 edition (JCT 2016 D&B Contract) that clients will need to be aware of. The changes are as follows:

Collaborative working and good faith

• Parties must work in a co-operative and collaborative manner.
• This is similar to the approach taken in New Engineering Contracts. Note this was previously a supplemental clause in the 2016 edition.

Modernisation

• Notices can now be served electronically via email to stipulated addresses.
• Gender-neutral language is now used throughout.

Sustainability obligations

• The Contractor has an obligation to suggest sustainability-driven amendments and to provide environmental impact information.

Building Safety Act: Contractor to be appointed as Building Regulations Principal Designer and Principal Contractor

• In accordance with the Duty Holder regime introduced by the Building Safety Act 2022, the JCT 2024 D&B Contract appoints the Contractor as both the Building Regulations Principal Designer and the Principal Contractor.
• Whether this is appropriate will depend on the timing of the Contractor’s involvement in the design process. For instance, it may make sense to instead appoint a consultant as Principal Designer in the earlier stages of a project.
• It should be noted that:
  • the Employer must be satisfied with the Contractor’s competence to carry out these roles;
  • JCT does not recommend the 2024 D&B Contract for Higher-Risk Buildings (i.e. buildings which are 18+ metres in height and contain 2+ residential dwellings) as there is no drafting to deal with the complexities here. For these works, parties will still need to amend the JCT 2024 D&B Contract; and
  • these roles do not exist under Welsh law.
• The amendments made are the bare minimum to address the obligations under these roles. Employers may want to add additional obligations around competence.

Design liability: exclusion of fitness for purpose 

• Updated design obligations expressly exclude the Contractor from being subject to a fitness for purpose obligation.
• This is in line with most Professional Indemnity policies and so is unlikely to be controversial in most cases, however, this may not be appropriate where a project includes performance-specified work or a design that is particularly novel or innovative.
• As drafted, this may only limit the Contractor’s design to reasonable skill and care, and not the execution of that design as part of the works – the Scottish courts have interpreted similar wording in the NEC contract to that proposed by JCT that way.
• Reasonable care and skill are also required “to the extent permitted by the Statutory Requirements”.

    Defective Premises Act 1972 liability extension

• The JCT 2024 D&B Contract now covers both sections 1 and 2A of the Defective Premises Act (DPA) 1972, meaning that work in relation to dwellings is now included.
• The standard of care here is subject to the statutory requirement of the DPA that the dwelling is fit for habitation.

Shorter delay assessment, more detailed process

• There is a more detailed obligation on the Employer to respond to claims relating to the extension of time within eight weeks rather than 12, running from the receipt of the notification or the receipt of further information.
• The Employer must notify the Contractor within 14 days if further information is required for them to assess an extension of time claim.

New (optional) relevant events, relevant matters and termination rights 

• There are additional insolvency grounds entitling a party to terminate which reflect the Corporate Insolvency and Governance Act 2020.
• An epidemic is now included as a relevant event and relevant matter.
• Changes in law, the publication of guidance or the exercise of any statutory power by the UK Government, any local authority or the Construction Leadership Council are included as relevant matters.
• There is a new right of termination for instances where a suspension arising from the above relevant events/ matters continues beyond the period stated in the Contract Particulars.

Clarification that liquidated damages do not apply post- termination

• Amendments have been made consequentially to the Supreme Court decision in Triple Point Technology, Inc v PTT Public Company Ltd [2021] UKSC 29, where it was held that liquidated damages ceased to accrue following the termination of a contract. 
• The Employer reserves the right to other remedies e.g. to general damages post-termination.

Antiquities provisions extended to ground conditions

• Antiquities provisions now extend to asbestos, contamination and unexploded ordnance, and is a relevant event and a relevant matter (except where the Contractor is at fault).
• This passes some unidentified ground condition risk back to the Employer. It is also not clear what might constitute “contamination” and so the extent of the Employer’s liability is uncertain. 
• Parties should consider what due diligence has been carried out to assess where the risk is best placed to sit as to whether this is appropriate.
• Note this does not apply where Contract Documents identify the material.

Construction Act-compliant payment provisions for termination payments

• Termination payments were previously recoverable immediately as a debt from the paying party. 
• The 2024 terms apply Construction Act-compliant payment terms, with a due date for payment of two months. 
• The Employer is deemed to have decided not to complete the Works unless it notifies the Contractor or makes arrangements to complete the Works.
• The time for the Employer to prepare the final account following termination has been shortened from three months to two. This is a point that Employer’s Agents should note in a termination scenario.

Obligation to escalate disputes

• There is greater emphasis on parties to negotiate and settle disputes and a clause which requires disputes to be escalated to nominated senior executives.
• Parties must promptly notify each other of matters which appear likely to give rise to a dispute or difference.
• The statutory right to adjudicate any dispute at any time is not affected.

Sub-contract termination

• The JCT 2024 D&B Contract 2024 clarifies the position that subcontracts shall terminate automatically following termination of the Contractor’s employment, subject to any step-in rights contained in collateral warranties and/ or third-party rights.

Analysis

With the exception of the additional relevant event and relevant matters, most of the changes do not really alter the balance of risk between Employer and Contractor and are points of detail and process. However, those changes that have been made to the balance of risk have the potential to turn a profitable project into one that is underwater. We therefore recommend that Employers continue to think carefully about their schedules of amendments.

The changes are slightly underwhelming, particularly in respect of the Building Safety Act, where the absence of provisions in respect of Higher-Risk Buildings seems like a missed opportunity to guide the industry’s thinking at a time of significant change.

However, it could be said that a different structured approach is warranted to procurement for Higher-Risk Buildings with early contractor involvement under a Pre-Construction Services Agreement may be appropriate – that may merit a separate version of the D&B contract once the practical experience and issues of the Gateway Process are better understood.

The close similarity to the 2016 form means that we have retained a familiar contract, and so we would expect that take-up and use of the 2024 form is likely to be fairly rapid. Previous updates with more significant changes often saw the previous forms remaining popular for some time despite having been superseded.

This article was co-authored by trainee solicitor, Megan Largier.